EMPLOYMENT references

Northwestern Financial Review, Mar 15-Mar 31, 2005 by Radolinski, Anne M

Employee references have been a headache for employers due to concerns over defamation challenges. The legislature recently passed a statute that provides some measure of reprieve.

Effective August 1, 2004, employers may have less concern about disclosing serious conduct by a current or former employee in response to an inquiry from a prospective employer, provided they are careful in the communication and follow procedures specified in the new law.

The new law provides protection against legal challenges for the disclosure of five categories of information in response to a specific request from prospective employers or employment agencies for the information:

* Dates of employment;

* Compensation and wage history;

* Job description and duties;

* Training and education provided by the employer; and

* Acts of violence, theft, harassment or illegal conduct.

The disclosure, with respect to the last category of information, must only be made in writing and then only if the behavior is documented in the individual's personnel file and the behavior resulted in disciplinary action or caused the employee's resignation. The employee's written response to the accusation or disciplinary action, if any, must also be included in the personnel file. The employer must in addition send a copy of the written disclosure contemporaneously by mail to the employee's last known address. Employers are cautioned, in regard to all of the above categories but in particular with respect to serious conduct disclosures, to make sure that every aspect of what is communicated is entirely accurate and not an exaggeration, characterization or opinion. The employer, as well as the individual who actually discloses the information on the employer's behalf, is still subject to legal action if:

1 the disclosure is false or defamatory in any respect;

2 the employer knew or had reason to know that the information was false; and

3 the employer acted with malicious intent to injure the current or former employee.

The new reference law also protects employers who disclose in writing certain broader categories of information upon obtaining the employee's or former employee's written authorization. These broader categories include in general terms: evaluations, disciplinary warnings, and reasons for separation. The employer must provide the employee or former employee with a copy of the written disclosure and information about to whom it was provided.

Employers are cautioned to review any disclosures, particularly regarding serious conduct, with their counsel prior to releasing the information because a mishap in phrasing or procedure can still result in significant legal liability.

Bank Focus is prepared by attorneys at the law firm of Fredrikson & Byron, PA. to report on legal developments in the fields of banking and finance. It is not intended as legal advice. Readers should not act upon the information contained in this publication without professional counsel. Please feel free to call one of the lawyers or senior paralegals listed at the right if you have any questions. No portion of this publication may be reproduced or used without express permission. For further information, please contact Erica Vickers via e-mailatevickers@fredlaw.com. For address changes you may also e-mail Erica or fax updated information to her at 612.492.7077. © 2005 FREDRlKSON & BYRON, RA.

ANNE M. RADOLINSKI

Bank & Finance Group

612.492.7104

aradolinski@fredlaw.com